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CheshireCa 23.10.2020 20:17

If you rent two homes, where do you pay tax?
 
Hi folk,

Following very helpful information from my previous questions, I have a more complicated one this time:

I understand that in Switzerland I pay taxes (for the whole year) in the place that I am resident in December.
Let us now assume that I rent 2 places. One where I live most of the year. And another where I live in December. Naturally the December one being in a very tax attractive region.
What would I need to do to satisfy the condition of being considered living in the second home in December? Let us assume that both my wife and I actually move there from the start of December and stay there, without visiting the first home during that month. Is that enough?
Assume that I actually work in a different unrelated municipality (I am on an EU B permit).

Cheers

JackieH 23.10.2020 20:45

Re: If you rent two homes, where do you pay tax?
 
Do you really think the Tax authorities I quite so stupid and not fully aware of this trick? Otherwise we would all be at it, wouldn't we???

CheshireCa 23.10.2020 20:49

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by JackieH (Post 3230587)
Do you really think the Tax authorities I quite so stupid and not fully aware of this trick? Otherwise we would all be at it, wouldn't we???

Well, the so called trick requires actually paying for two homes.
Regardless, from what I read about 29% of Swiss live in more than one home. So the question of what defines a primary residence for tax purposes is a common one.
This is an attempt to meet the requirement of residency in the lower tax area during Demeber, not an attempt to trick the tax authority.
In other words - I am looking at what to actually do, and plan to disclose the full truth of those actions to the tax authorities. As such it is completely legitimate tax planning.

Medea Fleecestealer 23.10.2020 21:07

Re: If you rent two homes, where do you pay tax?
 
Well, it is because you're trying to work out how to avoid paying tax at what is probably your main residence. Are you really trying to tell us you're going to tell the tax authority where your main residence is that you're moving to another canton for a month to avoid paying the tax you owe them? Pull the other one.

I don't know, but I would guess being resident for the major part of the year, i.e. at least 183 days.

If you can afford to rent two places you shouldn't need to worry about taxation anyway, you can more than afford to pay your dues.

CheshireCa 23.10.2020 21:19

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by Medea Fleecestealer (Post 3230594)
Well, it is because you're trying to work out how to avoid paying tax at what is probably your main residence. Are you really trying to tell us you're going to tell the tax authority where your main residence is that you're moving to another canton for a month to avoid paying the tax you owe them? Pull the other one.

I don't know, but I would guess being resident for the major part of the year, i.e. at least 183 days.

If you can afford to rent two places you shouldn't need to worry about taxation anyway, you can more than afford to pay your dues.

Actually, it is not according to 183. It is according to your residency at the end of the tax year.

What I am asking is not what will happen if I am resident at A for most of the year and then at B for only December. The answer to this is clear in the tax law, and it is that I will pay the tax at B. This is again, accepted standard of tax planning.

The question is WHAT counts as being resident at B, if I still rent a place at A. In other words, what is the creteria that defines residency at a given point (not 183 days logic, on a given day logic) in time if I rent more than one house?
Or by the same logic - these 183 days that you allude to - which days count in A and which in B? Is it merely that I am present in house A and not B and vice versa or is the criteria more sophisticated?

CheshireCa 23.10.2020 21:21

Re: If you rent two homes, where do you pay tax?
 
For removal of doubt - the only problem here is that I will still technically be also renting at A. If I could have an 11 months rent contract, this problem is solved.
But alas this is unlikely, so the question is about how is residency determined between two houses if I have access to both ...

LtSoftDrink 23.10.2020 21:35

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by CheshireCa (Post 3230582)
I understand that in Switzerland I pay taxes (for the whole year) in the place that I am resident in December.

A change of canton means you owe taxes p.r.t. according to the respective tax regimes, i.e. only December would be covered by the lower rate. Rest assured that, at the latest, with your de-registration in January the critical question of your “Lebensmittelpunkt” (centre of vital interest) would crop up.
Very unrealistic, your scenario :D

HickvonFrick 23.10.2020 21:38

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by LtSoftDrink (Post 3230606)
A change of canton means you owe taxes p.r.t. according to the respective tax regimes, i.e. only December would be covered by the lower rate. Rest assured that, at the latest, with your de-registration in January the critical question of your “Lebensmittelpunkt” (centre of vital interest) would crop up.
Very unrealistic, your scenario :D

I've made a genuine move from Basel to Aargau and was told I would only pay in Aargau this year

CheshireCa 23.10.2020 21:42

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by LtSoftDrink (Post 3230606)
A change of canton means you owe taxes p.r.t. according to the respective tax regimes, i.e. only December would be covered by the lower rate. Rest assured that, at the latest, with your de-registration in January the critical question of your “Lebensmittelpunkt” (centre of vital interest) would crop up.
Very unrealistic, your scenario :D

Thank you.
Are you sure about this?
The person who originally told me about moving municipalities was a tax advisor that prepared me for immigration. They said that if I register currently in Zurich, and then move to Freienbach before the start of December, I will pay all of my 2020 tax in Freienbach (or more precisely, submit a tax return claim based on Freienbach taxation). They claimed it's a general rule.
But according to what you are saying, when I move to Freienbach I am supposed to pay taxes in Zurich first?

Also, does this work per canton, or per monicipality? For example, what if both location A and B are in Canton Swiss, but different municipalities?

Finally, what if I BUY in location B, and rent and live in location A. Does the ownership give me a stronger claim to be tax resident in the B municipality compared to A, even if I spend less time there?

Did no one attempted before this consideration? Given the vast difference in tax between some places I doubt I am the first one to think of that.

CheshireCa 23.10.2020 21:44

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by HickvonFrick (Post 3230607)
I've made a genuine move from Basel to Aargau and was told I would only pay in Aargau this year

Thank you!
Interesting, what did you have to declare? As I plan to declare true, I want to see if I can actually fulfil the requirement. Did you have to declare no previous ties to Basel, or only that you live from now on in Aargau?

eyebeebe 23.10.2020 21:44

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by LtSoftDrink (Post 3230606)
A change of canton means you owe taxes p.r.t. according to the respective tax regimes, i.e. only December would be covered by the lower rate. Rest assured that, at the latest, with your de-registration in January the critical question of your “Lebensmittelpunkt” (centre of vital interest) would crop up.
Very unrealistic, your scenario :D

True within a canton, not true if you move canton. Then as stated by the OP, where you are at the end of the year counts.

CheshireCa 23.10.2020 21:48

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by eyebeebe (Post 3230610)
True within a canton, not true if you move canton. Then as stated by the OP, where you are at the end of the year counts.

OK, this is even better than I thought, I feared it had to be within the same canton, but having to move to a different one actually makes it easier.

Do you know what is considered "move" for that purpose if you have more than 1 house?

eyebeebe 23.10.2020 21:50

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by Medea Fleecestealer (Post 3230594)
If you can afford to rent two places you shouldn't need to worry about taxation anyway, you can more than afford to pay your dues.

I think what you mean is if you can afford to rent two places and believe this to be tax efficient, you can afford to get professional advice, rather than ask opinionated amateurs on the internet.

LtSoftDrink 23.10.2020 21:51

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by HickvonFrick (Post 3230607)
I've made a genuine move from Basel to Aargau and was told I would only pay in Aargau this year


How long were you registered in BS? All my moves between cantons involved two declarations for that year so far.

CheshireCa 23.10.2020 21:52

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by eyebeebe (Post 3230613)
I think what you mean is if you can afford to rent two places and believe this to be tax efficient, you can afford to get professional advice, rather than ask opinionated amateurs on the internet.

Haha, this is fair enough, and I actually did fire in parallel a question to my tax advisor. But I actually don't discount the wisdom of the hive mind, and in my previous questions people here managed to give me advise that proffesional services did not think of.
So it never hurts to get more opinions of folk who might have experience with this.

LtSoftDrink 23.10.2020 21:59

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by eyebeebe (Post 3230610)
True within a canton, not true if you move canton. Then as stated by the OP, where you are at the end of the year counts.

Stand corrected. Either something changed (unlikely) or I was conned :confused:
Anyway, you can't move back and forth and not expect to be challenged

JackieH 23.10.2020 21:59

Re: If you rent two homes, where do you pay tax?
 
It is a case of common sense too- and sze does matter too. If you have a studio in low tax Kanton, and a 5 bed, 3 bath in a higher one- and say you live in studio and only use the mansion for holidays, it would raise suspicions. This is a trick many who work in the Geneva region have been doing for a while- and the French Communes are not checking utilities like water and electricity/gas use. Our Gemeinde rules state that they utility providers have to give this information if requested by authorities.

eyebeebe 23.10.2020 22:03

Re: If you rent two homes, where do you pay tax?
 
It‘s a 25 minute train ride or CHF 60 and 20 mins in an Uber from Zurich to Pfäffikon. Why not just live there? It would be much simpler.

CheshireCa 23.10.2020 22:04

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by JackieH (Post 3230618)
It is a case of common sense too- and sze does matter too. If you have a studio in low tax Kanton, and a 5 bed, 3 bath in a higher one- and say you live in studio and only use the mansion for holidays, it would raise suspicions. This is a trick many who work in the Geneva region have been doing for a while- and the French Communes are not checking utilities like water and electricity/gas use. Our Gemeinde rules state that they utility providers have to give this information if requested by authorities.

I see. So if my use of utilities in location B is significantly lower than it was in location A (which is likely) then it won't be considered a genuine move.
Glad to hear that this was tested in Geneva, that means I can check precedence to see if and when this is considered legitimate by the tax authorities.

OK. What about house ownership? Does it make a difference? If I own a 1-2 bedroom place in location B, and rent a 4-5 bedroom place in A on an annual contract?

Again, it is important for me to see if I can genuinely make it work, while declaring to the tax authorities what I do. So I do not worry about requirements of disclosure because if they ask me where I use more electricity I will tell them.
I only condone truth based tax planning, not tax evasion.

CheshireCa 23.10.2020 22:06

Re: If you rent two homes, where do you pay tax?
 
Quote:

Originally Posted by eyebeebe (Post 3230619)
It‘s a 25 minute train ride or CHF 60 and 20 mins in an Uber from Zurich to Pfäffikon. Why not just live there? It would be much simpler.

It's more complex than that sadly. The cantons in question are not Zurich, this is just where I arrived.
I want to live in high altitude area in the mountains, in a remote rural setting. But the difference in tax is so huge compared to freieinbach that this question came about.

I actually work in Zurich but this doesn't matter as I work from home in the foreseeable few years anyway, so commute to work is rare.


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